U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

         [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
               SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 1997

                                       OR

         [   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
               OF THE SECURITIES EXCHANGE ACT OF 1934

            From the transition period from __________ to __________

                         Commission File Number 0-19899

                             U.S. HOME & GARDEN INC.
                          (Exact name of registrant as
                            specified in its charter)

           Delaware                                            77-0262908
(State or other jurisdiction                                  IRS Employer
of incorporation or organization)                        (Identification Number)

                        655 Montgomery Street, Suite 830
                         San Francisco, California 94111
                    (Address of Principal Executive Offices)

                                 (415) 616-8111
              (Registrant's Telephone Number, Including Area Code)

Indicate by check whether the registrant:  (1) has filed all reports required to
be filed by Section 13 or 15 (d) of the  Securities  Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                  Yes  __X__          No  ____

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common equity, as of the latest practicable date.

As of May 5, 1997 there were 14,007,841 shares of the issuer's common stock, par
value $.001 per share, outstanding.







<PAGE>

Part l. - Financial Information

Item 1. Consolidated Financial Statements

Consolidated balance sheet as of  March 31, 1997
and June 30, 1996 (unaudited)                                              1-3

Consolidated statements of operations for the three months
and nine months ended March 31, 1997 and 1996 (unaudited)                  4-5

Consolidated statements of cash flows for the nine months
ended March 31, 1997 and 1996 (unaudited)                                  6-7

Notes to consolidated financial statements                                 8-9

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.                                       10-17

Part II. - Other Information

Item 2.  Changes in Securities                                             18 

Item 6.  Exhibits and Reports on Form 8-K                                  18

Signatures                                                                 19




<PAGE>

<TABLE>

                                                      U.S. Home & Garden Inc. and Subsidiaries

                                                                    Consolidated Balance Sheet


==============================================================================================
<CAPTION>
                                                                  March 31,          June 30,
                                                                       1997              1996
----------------------------------------------------------------------------------------------
                                                                 (Unaudited)
<S>                                                            <C>                <C>        
Assets

Current
  Cash and cash equivalents                                    $    288,881       $   679,850
  Accounts receivable, less allowance for doubtful
   accounts and sales returns of $390,000 and
   $155,000                                                      21,390,335         7,109,392
  Inventories                                                     7,625,028         3,391,553
  Prepaid expenses and other current assets                         352,121           462,246
  Deferred tax asset                                              1,479,150         1,333,000
----------------------------------------------------------------------------------------------

Total current assets                                             31,135,515        12,976,041

Furniture, fixtures and equipment, net                            1,925,487         1,215,660

Intangible assets
  Excess of cost over net assets acquired of Weatherly
   Consumer Products Group, Inc., net of accumulated
   amortization of $463,273                                      20,387,263                 -
  Excess of cost over net assets acquired of Easy
   Gardener, Inc., net of accumulated amortization
   of $1,183,678 and $828,289                                    12,988,529        13,343,918
  Excess of cost over net assets acquired of Golden
   West Chemical Distributors, Inc., net of accumu-
   lated amortization of $485,782 and $406,903                    1,611,821         1,690,700
  Excess of cost over net assets acquired of Emerald
   Products, LLC, net of accumulated amortization of
   $62,853 and $29,356                                              772,676           749,375
  Deferred financing costs, net of accumulated amor-
   tization of $194,379 and $467,193                              1,555,028         1,004,614
  Product rights, patents and trademarks, net of
   accumulated amortization of $139,374 and $56,500               1,902,170           198,500
</TABLE>

                                                                               1

<PAGE>

<TABLE>
                                                      U.S. Home & Garden Inc. and Subsidiaries

                                                                    Consolidated Balance Sheet


==============================================================================================
<CAPTION>
                                                                  March 31,          June 30,
                                                                       1997              1996
----------------------------------------------------------------------------------------------
                                                                 (Unaudited)
<S>                                                            <C>                <C>        
Assets (continued)

Intangible assets (continued)
  Non-compete agreement, net of accumulated amortiza-
   tion of $16,062                                             $    483,938       $         -
  Package design, net of accumulated amortization of
   $92,230 and $56,016                                              168,618           180,293

Trade credits                                                     1,289,120         1,294,560

Officer receivables                                                 765,445           617,204

Other assets                                                         91,395           313,117
----------------------------------------------------------------------------------------------

                                                               $ 75,077,005       $33,583,982
==============================================================================================
                                  See accompanying notes to consolidated financial statements.
</TABLE>

                                                                               2


<PAGE>

<TABLE>
                                                      U.S. Home & Garden Inc. and Subsidiaries

                                                                    Consolidated Balance Sheet


==============================================================================================
<CAPTION>
                                                                  March 31,          June 30,
                                                                       1997              1996
----------------------------------------------------------------------------------------------
                                                                 (Unaudited)
<S>                                                            <C>                <C>        
Liabilities and Shareholders' Equity

Current
  Line of credit                                               $ 12,313,040       $ 1,288,146
  Current maturities of notes payable                             3,840,000         2,361,798
  Accounts payable                                                4,981,699         1,285,585
  Accrued expenses                                                3,598,455         1,085,797
  Accrued commissions                                               743,281           545,670
  Accrued interest                                                  325,565           592,271
  Accrued purchase consideration                                    629,403           488,888
----------------------------------------------------------------------------------------------

Total current liabilities                                        26,431,443         7,648,155

Deferred tax liability                                              328,000           328,000

Notes payable, less current maturities                           18,920,000         6,238,200
----------------------------------------------------------------------------------------------

Total liabilities                                                45,679,443        14,214,355
----------------------------------------------------------------------------------------------

Commitments, contingency and subsequent event

Shareholders' equity
  Preferred stock, $.001 par value - shares authorized,
   1,000,000; no shares outstanding                                       -                 -
  Common stock, $.001 par value - shares authorized,
   30,000,000; 10,507,381 and 14,007,841 shares issued
   and outstanding at June 30, 1996 and March 31, 1997               14,008            10,507
  Additional paid-in capital                                     30,557,272        21,413,422
  Accumulated deficit                                            (1,173,718)       (2,054,302)
----------------------------------------------------------------------------------------------

Total shareholders' equity                                       29,397,562        19,369,627
----------------------------------------------------------------------------------------------

                                                               $ 75,077,005       $33,583,982
==============================================================================================
                                  See accompanying notes to consolidated financial statements.
</TABLE>

                                                                               3

<PAGE>

<TABLE>
                                                      U.S. Home & Garden Inc. and Subsidiaries

                                                         Consolidated Statements of Operations


==============================================================================================
<CAPTION>

                                        Three Months Ended             Nine Months Ended
                                             March 31,                      March 31,
                                   ---------------------------    ----------------------------
                                       1997           1996            1997           1996
----------------------------------------------------------------------------------------------
                                            Unaudited                      Unaudited
                                   ---------------------------    ---------------------------
<S>                                <C>             <C>            <C>             <C>        
Net sales                          $ 20,558,512    $10,760,464    $ 33,497,245    $16,739,802

Cost of sales                         9,025,043      5,156,115      14,849,444      8,000,825
----------------------------------------------------------------------------------------------

Gross profit                         11,533,469      5,604,349      18,647,801      8,738,977
----------------------------------------------------------------------------------------------

Operating expenses
  Selling and shipping                3,704,267      1,954,238       7,693,975      4,271,744
  General and administrative          1,834,178        799,337       5,156,546      3,087,148
----------------------------------------------------------------------------------------------

                                      5,538,445      2,753,575      12,850,521      7,358,892
----------------------------------------------------------------------------------------------

Income from operations                5,995,024      2,850,774       5,797,280      1,380,085

Other income (expense)
  Investment income                      16,193         19,436          58,651         53,360
  Interest expense                     (993,206)      (541,250)     (2,368,453)    (1,471,352)
----------------------------------------------------------------------------------------------

Income (loss) before income
  taxes and extraordinary
  expense                             5,018,011      2,328,960       3,487,478        (37,907)

Income tax benefit (expense)         (2,075,000)       137,934      (1,600,000)       317,934
----------------------------------------------------------------------------------------------

Income before extraordinary
  expense                             2,943,011      2,466,894       1,887,478        280,027

Extraordinary expense of
  $1,459,266 on debt refinancing,
  net of income taxes of $452,372             -              -      (1,006,894)             -
----------------------------------------------------------------------------------------------

Net income                         $  2,943,011    $ 2,466,894    $    880,584    $   280,027
==============================================================================================
</TABLE>


                                                                               4

<PAGE>

<TABLE>
                                                      U.S. Home & Garden Inc. and Subsidiaries

                                                         Consolidated Statements of Operations


==============================================================================================
<CAPTION>

                                        Three Months Ended             Nine Months Ended
                                             March 31,                      March 31,
                                   ---------------------------    ----------------------------
                                       1997           1996            1997           1996
----------------------------------------------------------------------------------------------
                                            Unaudited                      Unaudited
                                   ---------------------------    ---------------------------
<S>                                <C>             <C>            <C>             <C>        
Income per common share
  before extraordinary
  expense                          $        .14    $       .16    $        .14    $       .03

Extraordinary expense                         -              -            (.07)             -

Net income per common share        $        .14    $       .16    $        .07    $       .03
==============================================================================================

Weighted average common
  and common equivalent
  shares outstanding                 22,696,000     19,002,000      13,552,000     10,127,000
==============================================================================================
                                  See accompanying notes to consolidated financial statements.
</TABLE>

                                                                               5

<PAGE>

<TABLE>
                                                      U.S. Home & Garden Inc. and Subsidiaries

                                                         Consolidated Statements of Cash Flows

==============================================================================================

<CAPTION>
Increase (Decrease) in Cash

Nine months ended March 31,                                             1997             1996
----------------------------------------------------------------------------------------------
                                                                                   (Unaudited)
<S>                                                            <C>                <C>        
Cash flows from operating activities
  Net income                                                   $     880,584      $   280,027
  Adjustments to reconcile net income to net cash
   used in operating activities:
     Extraordinary expense                                         1,006,894                -
     Depreciation and amortization                                 1,513,609          634,400
     Amortization of deferred financing costs                        216,472          187,754
     Changes in operating  assets and  liabilities, 
      net of assets  acquired and liabilities assumed:
        Accounts receivable                                      (12,938,505)      (4,971,436)
        Income tax receivable                                      1,082,407                -
        Inventories                                               (2,427,447)      (1,848,891)
        Prepaid expenses and other current assets                    224,608         (191,422)
        Accounts payable and accrued expenses                      5,120,304        2,069,543
        Other assets                                                 227,162         (369,364)
        Deferred tax asset                                         1,091,753                -
----------------------------------------------------------------------------------------------

Net cash used in operating activities                             (4,002,159)      (4,209,389)
----------------------------------------------------------------------------------------------

Cash flows from investing activities
  Payment for purchase of business, net of cash acquired         (24,347,251)      (1,041,262)
  Payment for non-compete                                           (500,000)               -
  Increase in officer receivables                                   (148,241)        (159,196)
  Purchase of furniture, fixtures and equipment                     (476,159)        (248,720)
  Purchase of package design                                               -          (93,234)
----------------------------------------------------------------------------------------------

Net cash used in investing activities                            (25,471,651)      (1,542,412)

----------------------------------------------------------------------------------------------
</TABLE>

                                                                               6

<PAGE>


<TABLE>
                                                      U.S. Home & Garden Inc. and Subsidiaries

                                                         Consolidated Statements of Cash Flows


==============================================================================================

<CAPTION>
Nine months ended March 31,                                          1997             1996
----------------------------------------------------------------------------------------------
                                                                          (Unaudited)
<S>                                                            <C>                <C>        
Cash flows from financing activities
  Proceeds from warrants exercised                             $   5,297,352      $ 1,355,743
  Proceeds from bank line of credit                               27,944,014       10,574,429
  Payment on bank line of credit                                 (16,919,120)      (5,403,471)
  Proceeds from notes payable                                     16,783,335                -
  Payments of notes payable                                       (2,623,333)      (1,200,000)
  Acquisition finance costs                                       (1,399,407)               -
----------------------------------------------------------------------------------------------

Net cash provided by financing activities                         29,082,841        5,326,701
----------------------------------------------------------------------------------------------

Net decrease in cash                                                (390,969)        (425,100)

Cash and cash equivalents, beginning of period                       679,850          970,310
----------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period                       $     288,881      $   545,210
==============================================================================================


Supplemental disclosure of cash flow information
  Cash paid for interest, including deferred financing
   costs                                                       $   4,097,942      $ 1,036,164
  Cash paid for taxes                                          $      13,376      $    76,403
==============================================================================================
                                  See accompanying notes to consolidated financial statements.
</TABLE>


                                                                               7

<PAGE>

                                        U.S. Home & Garden Inc. and Subsidiaries

                                      Notes to Consolidated Financial Statements


================================================================================

1.   The accompanying  consolidated  financial statements at March 31, 1997, and
     for the three and nine months ended March 31, 1997 and 1996 are  unaudited,
     but, in the opinion of management,  include all adjustments necessary for a
     fair  presentation  of  consolidated  financial  position  and  results  of
     operations for the periods presented.

2.   Refer to the audited financial statements for the year ended June 30, 1996,
     for details of accounting policies and accounts.

3.   On  August  9,  1996,  Easy  Gardener  Acquisition  Corporation  (EGAC),  a
     wholly-owned  subsidiary  of the Company,  acquired all of the  outstanding
     stock of Weatherly  Consumer Products Group, Inc.  (Weatherly),  a lawn and
     garden care  company,  for 1,000,000  shares of the Company's  common stock
     (valued  at $3 per  share)  and  $22,937,321,  less an amount  required  to
     discharge certain  outstanding  indebtedness of the acquired  company,  and
     adjusted  dollar for dollar based upon the  ultimate  value of the acquired
     company's net current  assets  (approximately  $2.4  million).  The Company
     operates the acquired company as a subsidiary of EGAC.

     In connection with the above acquisition,  the Company's  outstanding notes
     payable  were  refinanced  and  a  new  line  of  credit   arrangement  was
     established.  Under the  terms of the new loan  agreement,  two  promissory
     notes were issued in the principal  amount of $23,000,000  and  $2,250,000,
     respectively.  The $23,000,000 note requires  quarterly  principal payments
     ranging from  $570,000 to $1,350,000  beginning  September 30, 1996 through
     June 30, 2002 and bears  interest at the lower of prime or LIBOR rates,  as
     defined. The $2,250,000 note requires quarterly principal payments totaling
     $140,625 beginning September 30, 1998, through December 30, 1999, and bears
     interest at prime plus 6%. The line of credit  agreement  calls for maximum
     borrowings  totaling  $13,000,000  with  interest  at the lower of prime or
     LIBOR  rates.  As a result  of this  refinancing,  the  entire  balance  of
     deferred  finance costs at June 30, 1996, net of accumulated  amortization,
     plus  certain  prepayment  penalties,  was written off as an  extraordinary
     expense  during the six  months  ended  December  31,  1996.  Extraordinary
     expense, net of $452,000 tax benefit,  totaled approximately  $1,007,000 in
     the nine months ended March 31, 1997.

     In conjunction  with the debt  refinancing,  a warrant to purchase  400,000
     shares  of stock  at $2.50  per  share  was  issued  to  certain  financial
     institutions  which provided the financing.  The warrant has been valued at
     $350,000 and is being  amortized  over the six-year  term of the  financing
     agreement.

                                                                               8

<PAGE>


                                        U.S. Home & Garden Inc. and Subsidiaries

                                      Notes to Consolidated Financial Statements


================================================================================

     Subsequent  to June  30,  1996,  warrants  and a unit  purchase  option  to
     purchase  common  stock were  exercised  resulting  in net  proceeds to the
     Company of  approximately  $5,200,000.  These  proceeds were used to fund a
     portion of the Weatherly acquisition.

     Subsequent  to June 30, 1996,  the Company  granted  stock options (with an
     exercise  price equal to the current  market  price) to purchase  2,115,000
     shares of common stock to various  employees and  consultants  primarily as
     bonus  compensation  for fiscal 1996  operating  results and the  Weatherly
     acquisition.  In  addition,  the Company also granted an option to purchase
     200,000  shares of common  stock to a  financial  consultant  for  services
     relating to the Weatherly  acquisition.  The option has a nominal  exercise
     price and will be recorded  as a cost of the  acquisition  (estimated  fair
     value approximately $500,000),  thus increasing the excess of cost over net
     assets acquired of Weatherly.

     The  acquisition  was  accounted for as a purchase  and,  accordingly,  the
     results of operations of Weatherly  have been included in the  consolidated
     statement of the operations  since August 9, 1996. The value of intangibles
     purchased  and the  excess of the  purchase  price  over the fair  value of
     assets acquired totalled  approximately $20.8 million and will be amortized
     on a straight line basis over the estimated useful life of thirty years.

     The following unaudited pro forma summary combines the consolidated results
     of  operations  of the  Company and  Weatherly  as if the  acquisition  had
     occurred at the  beginning of fiscal 1995,  after giving  effect to certain
     adjustments,  including  the  amortization  of  excess  costs  over  assets
     acquired  and the  elimination  of certain  expenses  incurred by Weatherly
     related to the  acquisition.  This pro forma  summary does not  necessarily
     reflect  the results of  operations  as they would have been if the Company
     and Weatherly had constituted a single entity during such period and is not
     necessarily indicative of results which may be obtained in the future.

     Nine months ended March 31,                       1997              1996
--------------------------------------------------------------------------------

     Net sales                                     $ 34,239,000    $ 30,497,000
     Net income before extraordinary expense          1,514,000         801,000
     Net loss                                           (12,000)       (725,000)
     Net income per common share before         
          extraordinary expense                             .11             .06
     Net income (loss) per common share                    --              (.05)
================================================================================

                                                                               9

<PAGE>


                 ITEM 2- MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS



General

     On August 9, 1996, Easy Gardener  Acquisition Corp.  ("EGAC"), a subsidiary
of the Company,  acquired  all of the  outstanding  stock of Weatherly  Consumer
Products Group, Inc., ("Weatherly"),  a lawn and garden care company. See Note 3
of Notes to the Consolidated  Financial  Statements for a description of certain
terms of the acquisition.

THREE MONTHS ENDED MARCH 31, 1997 AND 1996

     The Company's  consolidated  net sales increased to $20,558,512  during the
three months ended March 31, 1997 from $10,760,464  during the comparable period
in 1996.  The increase in net sales  resulted from the inclusion of  Weatherly's
sales of approximately  $7,756,000  during the three months ended March 31, 1997
compared to $0 in the  comparable  period in 1996.  In  addition,  approximately
$2,036,000  of the increase in sales  resulted  from an increase in shipments of
EGAC's  products from the comparable  period in 1996. The Company  believes that
its sales were  positively  affected by the  continued  penetration  in existing
markets,  expansion  into new markets and a higher  recognition  of EGAC's brand
name and products.

     The Company's  consolidated  cost of goods sold and gross profit  generated
during the quarter  ended  March 31,  1997 were also higher than the  comparable
period in 1996  primarily  due to the increase in net sales and the inclusion of
Weatherly's  costs of goods sold and gross profit.  Gross profit as a percentage
of net sales,  for the three  months  ended  March 31, 1997 and 1996 was 56% and
52%, respectively.  This increase is due to the addition of Weatherly's products
which have a higher gross profit percentage.

     The  Company's  consolidated  selling and  shipping  expenses  increased to
$3,704,267  during the three months ended March 31, 1997 from $1,954,238  during
the comparable period in 1996 primarily as a result of the increase in net sales
and the attendant  increase in selling and shipping  expenses as a result of the
acquisition of Weatherly.  Selling and shipping  expenses as a percentage of net
sales  for the three  months  ended  March 31,  1997  remained  constant  at 18%
compared to the comparable period in 1996.

     The Company's consolidated general and administrative expenses increased to
$1,834,178 during the three months ended March 31,

                                       10

<PAGE>



1997 from $799,337 during the comparable period in 1996 primarily as a result of
the inclusion of Weatherly  expenses.  In addition,  the increase in general and
administrative  expenses was due to the overhead  expenses  associated  with the
overall  increase  in  the  size  of the  Company.  General  and  administrative
expenses,  as a  percentage  of net sales,  for the three months ended March 31,
1997 increased from 7% to 9% when compared to the comparable period in 1996.

     The Company's  consolidated  interest expense  increased to $993,206 during
the three months ended March 31, 1997 from $541,250 during the comparable period
in 1996  primarily  due to the increase in  outstanding  indebtedness  which was
incurred in connection with the purchase of Weatherly.

     The  Company's  consolidated  income tax expense  increased  to  $2,075,000
during the three  months  ended  March 31,  1997 from a tax  benefit of $137,934
during the comparable period in 1996 primarily due to the Company's reduction of
the deferred tax asset  valuation  allowance  associated  with the available net
operating loss carryforwards.

     As a result of the  foregoing,  the  Company  incurred a  consolidated  net
income of  $2,943,011  in the three  months  ended March 31, 1997  compared to a
consolidated net income of $2,466,894 in the comparable 1996 period.


NINE MONTHS ENDED MARCH 31, 1997 AND 1996

     The Company's  consolidated  net sales increased to $33,497,245  during the
nine months ended March 31, 1997 from $16,739,802  during the comparable  period
in 1996.  The increase in net sales  resulted  primarily  from the  inclusion of
Weatherly's  sales of  approximately  $12,321,000  during the nine months  ended
March 31, 1997  compared to $0 in the  comparable  period in 1996.  In addition,
approximately  $4,598,000 of the increase in sales  resulted from an increase in
shipments of EGAC's  products from the comparable  period in 1996.  Furthermore,
the Company  believes that its sales were  positively  affected by the continued
penetration  in  existing  markets,  expansion  into  new  markets  and a higher
recognition of EGAC's brand name and products.

     The Company's  consolidated  cost of goods sold and gross profit  generated
during the nine months ended March 31, 1997 were also higher than the comparable
period in 1996  primarily  due to the increase in net sales and the inclusion of
Weatherly's  costs of goods sold and gross profit.  Gross profit as a percentage
of net sales, for the nine months ended March 31, 1997 and 1996 was 56% and 52%,
respectively. This increase is due to the addition of Weatherly's products which
have a higher gross profit percentage.

     The Company's consolidated selling and shipping expenses

                                       11

<PAGE>



increased  to  $7,693,975  during  the nine  months  ended  March 31,  1997 from
$4,271,744  during the  comparable  period in 1996  primarily as a result of the
increase  in net  sales and the  attendant  increase  in  selling  and  shipping
expenses as a result of the  acquisition  of  Weatherly.  Selling  and  shipping
expenses as a  percentage  of net sales for the nine months ended March 31, 1997
decreased from 26% to 23% compared to the comparable period in 1996 primarily as
a result of economies of scales gained from the sale of new products to existing
customers and the commencement of the consolidation of EGAC and Weatherly.

     The Company's consolidated general and administrative expenses increased to
$5,156,546  during the nine months ended March 31, 1997 from  $3,087,148  during
the  comparable  period  in 1996  primarily  as a  result  of the  inclusion  of
Weatherly  expenses.  In addition,  the  increase in general and  administrative
expenses was due to the overhead  expenses  associated with the overall increase
in the size of the Company. General and administrative expenses, as a percentage
of net sales, for the nine months ended March 31, 1997 decreased from 18% to 15%
compared to the  comparable  period in 1996.  The decrease is  attributed to the
commencement of the consolidation of Easy Gardener and Weatherly.

     The Company's  consolidated interest expense increased to $2,368,453 during
the nine  months  ended  March 31, 1997 from  $1,471,352  during the  comparable
period in 1996 primarily due to the increase in outstanding  indebtedness  which
was incurred in connection with the purchase of Weatherly.

     The  Company's  consolidated  income tax expense  increased to  $1,600,000,
during  the nine  months  ended  March 31,  1997 from an income  tax  benefit of
$317,934  during the  comparable  period in 1996  primarily due to the Company's
reduction of the  deferred tax asset  valuation  allowance  associated  with net
operating loss carryforwards.

     In connection with the Weatherly acquisition,  during the nine months ended
March  31,  1997,  the  Company  incurred  an   extraordinary   expense  on  the
refinancing,  at a more  favorable  rate,  of  outstanding  notes payable and an
outstanding  revolving  credit  facility.  As a result of the  refinancing,  the
Company  incurred an  extraordinary  expense of  $1,006,894  ($1,459,266  net of
$452,372 of tax benefit),  or $.07 per share. There was no comparable expense in
the corresponding 1996 period. The extraordinary expense consists of the balance
of  deferred  finance  costs,  net of  accumulated  amortization,  plus  certain
prepayment penalties. See " Liquidity and Capital Resources".

     As a result of the  foregoing,  the  Company  incurred a  consolidated  net
income of  $880,584  in the nine  months  ended  March 31,  1997  compared  to a
consolidated net income of $280,027 in the comparable 1996 period.

                                       12

<PAGE>

Liquidity and Capital Resources

     From  inception the Company has financed its operations  primarily  through
net  proceeds  from the  Company's  private and public sales of  securities  and
borrowings from lending institutions.

     At March  31,  1997,  the  Company  had  consolidated  cash and  short-term
investments  totalling  $288,881 and working capital of $4,821,284.  At June 30,
1996, the Company had  consolidated  cash and short-term  investments  totalling
$679,850 and working capital of $5,327,886. The decrease in working capital from
June 30, 1996 is due primarily to the additional  notes payable,  line of credit
and  additional  accrued  purchase  consideration  for  the  acquisition  of the
outstanding stock of Weatherly.  Additionally,  the seasonal fluctuations in the
Company's operations has resulted in a decrease in working capital from June 30,
1996.

     Net cash used in operating  activities  for the nine months ended March 31,
1997 was $4,002,159 consisting primarily of a decrease in accounts receivable, a
decrease  in  inventory  offset by the  extraordinary  expense,  an  increase in
accounts  payable and accrued  expenses  and an  increase  in  depreciation  and
amortization.  Net cash used in investing  activities  for the nine months ended
March  31,  1997  was  $25,471,651  consisting  primarily  of cash  used for the
acquisition of Weatherly. Net cash provided by financing activities for the nine
months  ended  March  31,  1997  was  $29,082,841  consisting  primarily  of the
additional  proceeds from the notes payable used in connection with the purchase
of Weatherly, the increase in the bank line of credit due to seasonality and the
exercising of warrants to purchase common stock which was substantially used for
the purchase of Weatherly.

     At March 31,  1997 the Company had  consolidated  term debt of  $22,760,000
million which was incurred in connection  with the purchase of Weatherly and the
refinancing  of  EGAC'S  outstanding  notes  payable.  In  connection  with  the
acquisition  of  Weatherly,  EGAC entered into a new credit  agreement  ("Credit
Agreement") with certain  institutional lenders under which its outstanding term
loan and revolving credit  indebtedness were refinanced.  Pursuant to the Credit
Agreement,  the lenders have provided the Company with the  following  revolving
credit and term loan facilities:

     (a) Revolving Credit  Facility:  The maximum amount available for borrowing
under this  facility from time to time is equal to the lesser of $13 million and
a borrowing  base  determined  by reference to specified  percentages  of EGAC's
consolidated  accounts  receivable and inventory  deemed to be "eligible" by the
lenders.  For the period of  December  1, 1996  through  February  28,  1997 the
Company  has  received  a  temporary  overadvance  on  the  borrowing  base  for
$3,100,000. As of March 31, 1997, based on this formula

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<PAGE>



$13,000,000  was available for borrowing and  $12,313,040  was  outstanding.  In
April 1997,  the  Revolving  Credit  Facility was amended to provide the Company
with an  additional  $3,000,000  in  available  borrowing  during  the months of
February,  March,  April and May of each fiscal year. Any  additional  borrowing
must be paid by May 31st of the year in which borrowed. This additional increase
is for the working  capital needs during the peak season months and has the same
"eligible" requirements as the original amount.

     Revolving credit loans bear interest at an annual rate chosen by EGAC based
on the prime rate of one of the lenders or LIBOR (the London inter-bank  offered
rate) plus an applicable  marginal rate. At March 31, 1997 the effective  annual
rate for the outstanding  revolving credit loans was 9.75%. The revolving credit
facility  expires on June 30, 2002 (the  "Expiration  Date") and all outstanding
revolving credit loans are then due, unless such loans are required to be repaid
earlier by the terms of the Credit Agreement.  In addition,  for a 10 day period
in each  year,  all  outstanding  revolving  credit  loans  must be paid  and no
revolving  credit  loans  may  be  borrowed.   Revolving  credit  loans  may  be
voluntarily  prepaid at any time.  Subject to the  availability  formula and the
Expiration  Date,  amounts  repaid  may be  reborrowed  and,  subject to certain
restrictions, outstanding prime rate loans may be converted to LIBOR rate loans.
EGAC is also  required  to pay  certain  commitment,  service  and other fees in
connection  with this  facility.  If EGAC  determines to terminate the revolving
credit facility prior to the Expiration  Date, the outstanding  revolving credit
loan  must be  prepaid  together  with a premium  from 1% to 3% of the  "Average
Yearly Loan  Balance"  (as  defined in the Credit  Agreement)  of the  revolving
credit loans.

     (b) Term Loan Facility:  Pursuant to this facility,  EGAC obtained two term
loans (the "Term Loans"), one in the principal amount of $23 million ("Term Loan
I") and the other in the  principal  amount of $2.25  million  ("Term Loan II"),
each of which  matures on the  Expiration  Date.  The Term Loans are  payable in
quarterly  installments of principal,  commencing as to Term Loan I in September
1996  and as to Term  Loan II in  September  1998.  Interest  on Term  Loan I is
payable,  at the  election  of EGAC,  at the  adjusted  prime rate or LIBOR rate
described  above, and EGAC from time to time,  subject to certain  restrictions,
may  convert  Term  Loan I from a prime  rate  loan to a LIBOR  rate  loan.  The
effective  annual rate of interest for Term Loan I is 9.75%.  Term Loan II bears
interest at a floating  rate equal to the prime rate of one of the lenders  plus
6%. The effective annual rate of interest for Term Loan II is 14.5%. Interest is
payable  monthly in  arrears on prime rate loans and at the end of the  interest
period for a LIBOR rate loan if the interest period is 3 months or less. If EGAC
elects to prepay Term Loan I in full, at any time prior to the Expiration  Date,
EGAC is also obligated to prepay a premium from 1% to 3% of the amount  prepaid.
Term Loan I is subject to certain mandatory  prepayments of the principal amount
of such Term Loan from "excess

                                       14

<PAGE>

cash flow" (as defined in the Credit Agreement) of EGAC and certain net proceeds
of asset sales, condemnation awards and insurance recoveries. The next mandatory
prepayment of the principal amount of the Term Loan I on account of "excess cash
flow", if any, will be due in October 1997.

     EGAC's obligation to pay the principal of, the interest on, and/or premium,
if any, and all other amounts  payable on account of the revolving  credit loans
and the Term Loans is secured by substantially all of the assets of EGAC and its
subsidiaries   and  the  irrevocable   guarantees  of  the  Company  and  EGAC's
subsidiaries  of such  obligations.  Upon the  occurrence  of events of  default
specified in the Credit  Agreement,  the maturity of the  outstanding  principal
amounts of the revolving  credit loans and the Term Loans may be  accelerated by
the  lenders  who may  also  foreclose  on the  secured  assets  of EGAC and its
subsidiaries.

     Under the Credit  Agreement (a) EGAC is required,  among other  things,  to
comply with certain  limitations on incurring  additional  indebtedness,  liens,
guarantees, capital and operating lease expenses in excess of a specified amount
per year, and sales of assets and payment of dividends, (b) EGAC and the Company
must  comply  with  certain  limitations  on  merger,  liquidations,  changes in
business,   investments,   loans  and  advances,   or  certain   acquisition  of
subsidiaries.  In  addition,  EGAC must comply  with  certain  minimum  interest
coverage,  debt  service and fixed  change  rates,  not permit its Net Worth (as
defined) to be less than certain amounts and generate certain minimum amounts of
income  before  interest  expenses,  taxes,  depreciation  and  amortization.  A
violation of any of these  covenants  constitutes  an event of default under the
Credit Agreement.

     The Company's cash flow and capital  requirements are typically affected by
the seasonal nature of its business. Sales of the Company's lawn and garden care
products,  including EGAC's, are highly seasonal, with the shipments of products
heavily   concentrated  in  the  spring  and  summer.  Sales  of  the  Company's
agricultural products,  through its subsidiary Golden West Agri-Products,  Inc.,
("Golden  West"),  are also seasonal.  Most shipments of Golden West's  products
occur during the period from March through October (the agricultural cultivation
period), with orders by agricultural distributors generally placed a month prior
to shipment.  The  Company's  results of  operations  may be severely  adversely
affected  by  poor  weather  conditions.   Prolonged  periods  of  poor  weather
conditions could result in reduced consumer weekend  purchases of do-it-yourself
lawn and  garden  care  products  and  reduced  agricultural  planting,  thereby
reducing sales of the Company's products. In addition,  unexpected production or
transportation  difficulties  occurring at a time of peak production could cause
sales losses which would not be readily reversed before the following year.


                                       15

<PAGE>

     The Company believes that the consolidated operations of EGAC will generate
sufficient  cash  flow to  service  the debt  incurred  in  connection  with the
acquisition of the assets of Easy Gardener, Inc. ("EGI"), and the acquisition of
Weatherly. However, if such cash flow is not sufficient to service the debt, the
Company will be required to seek additional financing which may not be available
on  commercially  acceptable  terms or at all.  In  addition,  the  Company  has
commenced amortizing over 30 years approximately $14,170,000 of goodwill related
to the purchase of the assets of EGI (being the value of the cost over the value
of the assets acquired).  Furthermore, the Company has commenced amortizing over
20 years  approximately  $836,000 of goodwill related to the purchase of Emerald
Products, LLC. The Company is already amortizing approximately $105,000 per year
of goodwill relating to the acquisition of Golden West. As of August 9, 1996, in
connection with the purchase of Weatherly,  the Company has commenced amortizing
approximately  $20,850,000 of goodwill over 30 years.  Operating  income for the
quarter ended March 31, 1997 was reduced by  approximately  $341,000 as a result
of the amortization of goodwill for all acquisitions  consummated prior to March
31, 1997.

     In April 1996, the Company  entered into an agreement with an  unaffiliated
company  pursuant  to  which  it sold all of the  remaining  inventory  of Power
Gardener units, as well as, the  manufacturing  rights and  manufacturing  molds
relating to the Power Gardener product in consideration  for $1,600,000 of trade
credits.  To the extent the  unaffiliated  company sells Power Gardener units it
will remit a specified  percentage of the net cash proceeds of such sales to the
Company  which  will  proportionately  reduce  the  value of the  trade  credits
received by the Company. The trade credits are for advertising media,  equipment
and  services.  The  trade  credits  expire  three  years  from  the date of the
agreement.

     As of March 31, 1997,  the Company has a deferred  tax asset of  $1,479,150
the majority  relating to the tax benefit  associated  with the  accumulated net
operating  losses of  approximately  $2,600,000  for Federal income tax purposes
which expire in 2009 and  approximately  $1.2 million of net operating  loss tax
benefits acquired in the Weatherly  acquisition.  The Company believes that with
the successful implementation of the September 1994 acquisition of the assets of
EGI and the most recent  Weatherly  acquisition  in August 1996,  realization of
this asset is more likely than not.  For  California  income tax  purposes,  the
Company has accumulated net operating losses of  approximately  $1,900,000 which
expire through 2000.  Based upon the estimated  taxable income to be apportioned
to California over the next few fiscal years and considering the expiration date
of the net operating loss  carryovers,  the Company has  established a valuation
allowance  relating to the majority of the estimated $180,000 benefit associated
with the California net operating loss carryovers.

     In January 1997, the Company borrowed $550,000,  in the aggregate,  from an
individual  and an  institutional  lender.  The loans are being  used to satisfy
short term working capital requirements.

     In February 1997, the Financial Accounting Standards Board issued Statement
of Financial  Accounting Standards ("SFAS") No. 128, "Earnings per Share," which
is effective for both interim and annual periods ending after December 15, 1997.
Earlier  application is not permitted.  The Company  accordingly  plans to adopt
SFAS No. 128 in its December 31, 1997 interim financial statements.  The Company
has not yet  determined  the effect that SFAS No. 128 will have on the  earnings
per share, if it had been adopted in the first quarter of fiscal 1997.

                                       16

<PAGE>

     In May 1997,  the Company  purchased  certain  assets from  Plastic  Molded
Concepts,  Inc. relating to its Plasti-Chain(R) line of products for $4,315,911.
The  Plasti-Chain(R)  product line  consists of an  assortment  of plastic chain
links and decorative  edgings.  In connection with the acquisition,  the Company
increased  its term debt by  $3,800,000  with the balance of the purchase  price
funded  by the  Revolving  Credit  Facility.  The new term  debt is  payable  in
November 1997.

     The Company intends to pursue a growth strategy  through the acquisition of
products  and/or  companies.  The  Company  anticipates  that  it  will  require
additional financing to fund any additional acquisitions.








                                       17

<PAGE>

                           PART II - OTHER INFORMATION


Item 2 Changes in Securities

     During the quarter  ended March 31, 1997,  the Company  issued  warrants to
purchase 50,000 shares of its common stock,  exercisable at $2.34 to a financial
consultant to the Company for services rendered to the Company. In addition, the
Company  issued a  $350,000  convertible  promissory  note  which  is  currently
convertible  into  153,509  shares of common  stock and a five year  warrant  to
purchase 50,000 shares of common stock  exercisable at 2.28 per share.  The note
and warrant were issued to the lender in  consideration of certain loans made to
the Company.  The issuances of the securities  described above were deemed to be
exempt from  registration  under the  Securities  Act of 1933 in  reliance  upon
Section 4(2) thereof as transactions not involving a public offering.

Item 6. Exhibits and Reports on Form 8-K

a.   Exhibits

     11.1 Statement of Computation of Per Share Earnings.

     27   Financial Data Schedule (for SEC use only)

b. No  reports on Form 8-K were  filed for the  quarter in which this  report is
filed.

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<PAGE>


                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                                   U.S. HOME & GARDEN INC.
                                                          (Registrant)


Date:  May 12, 1997                         By: /s/  Robert Kassel
                                                -------------------------------
                                                     Robert Kassel, President,
                                                   Chief Executive Officer and
                                                    Treasurer (Duly Authorized
                                                         Officer and Principal
                                                      Financial and Accounting
                                                                      Officer)


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